Forecasting Price Trends: A weekly column by G.M. Teoh on Crude Palm Oil, Soyoil, Cocoa and Cash-Tin.
The Malaysia Derivatives Exchange (MDEX) crude palm oil (CPO) futures prices extended on their upward cycle and trended higher on moderately active speculative buying and finally ended Friday with minor gains.
Buying enthusiasm was lifted by expectations that the May 1–10 palm oil export figures due for release today by cargo surveyors ITS and SGS would be around 350,000 tonnes compared with 314,445 tonnes in the corresponding period in April.
The benchmark third-month July 2003 futures prices rebounded strongly from a week's low of RM1,353 to RM1,408 and ended the week higher at RM1,406, up RM32 per tonne from previously.
Based on chart CPO futures closed the week positive and are expected to settle into band trading following their nearly 50% recovery from the late April lows.
The July futures prices have an immediate resistance at the RM1,410–RM1,415 levels. For the three-week-old upward recovery rally to sustain, the market has to vault this resistance successfully. Failure to do so this week could result in a mild technical pullback.
The immediate chart support for this week stands at the RM1,390–RM1,380 levels. Breaching of this immediate chart support would signal the upward momentum has fizzled.
The daily technical indicators closed the week mostly positive and suggested the market's immediate momentum is positive.
The daily stochastics closed the week deep in the bullish extended-move zones and signalled the market is slightly toppish. The oscillators per cent K and D ended the week sharply higher at 93.06% and 82.18% respectively.
Technical traders would look for clues of a downward adjustment sell signal when the oscillator per cent K cuts below the oscillator per cent D.
The 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines) continue to indicate the upward cycle is intact. The 3- and 7-day ESA-lines closed the week higher at 1,393 and 1,380 points respectively.
The daily moving-average convergence/divergence (MACD) (not shown in the chart) remained bullish at Friday’s close. The daily MACD closed the week above the trigger-line and settled higher at minus 15.32 and minus 21.21 points respectively.
The daily Momentum Index (M.I) remained above 100-point mark and ended the week higher at 104.40. Based on the MI the immediate-term market’s momentum is positive.
Soyoil futures prices on the Chicago Board of Trade recovered from earlier losses last week, but the advances were dampened by worries about Chinese soybean demand and good progress in the U.S. soybean plantings.
According to the US Department of Agriculture (UDSA), American farmers had seeded 11% of the soybean crop last week, ahead of traders' estimates and at par with the five-year planting pace.
The July 2003 soyoil futures prices ranged from a week's low of 21.56 to 22.20 US cents and they finally settled Thursday slightly higher at 21.96 US cents, up 0.16 US cent per pound from a week ago.
Based on chart the July soyoil futures prices closed the week neutral-to-slightly negative and are set for congestion trading this week.
The July futures have an immediate chart support this week at the 21.70–21.80 US cents levels. Violation of this chart support could drag the market lower for a test of the minor support at the 21.50–21.60 US cents levels. Overhead chart resistance is seen at 22.10–22.20 US. A successful push above this minor chart resistance could lift the market higher for a test of its five-week highs at the 22.60–22.70 US cents levels.
The daily technical indicators finished the week mixed and signalled the market has room for more sideways congestion trading this week.
The daily stochastics triggered the buy signal on May 7 and indicated the market’s immediate wave is positive. The daily oscillator per cent K ended above the oscillator per cent D and closed the week lower at 59.49% and 46.80% respectively.
The daily moving-average convergence/divergence (MACD) remained negative at Friday’s close and indicated the market’s main trend is still negative. The daily MACD closed below the trigger-line and finished lower in the positive zones at 0.09 and 0.10 of a point respectively.
The 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines) crossed over and triggered the positive signal on May 7. The 3- and 7-day ESA-lines ended the week slightly higher at 21.95 and 21.91 respectively. Based on the ESA-lines the immediate-term market could trend sideways with a slight upward bias.
The daily Momentum Index (MI) penetrated the 100-point mark and settled higher in the positive territory at 101.47. Analysis of the daily MI shows the market’s immediate cycle could remain positive.
Cocoa futures prices on the Coffee, Sugar & Cocoa Exchange in New York plunged to fresh five-month lows as traders turned bearish on active spread trading last week.
Traders ignored news of the political situation in Ivory Coast and instead concentrated on the improved crop and supply prospects from Ivory Coast, Indonesia and Ghana that generally point to ample supply in the near term.
The July 2003 cocoa prices fell from a week's high of US$1,925 to US$1,790 and closed Thursday sharply lower at US$1,805, down a hefty US$147 a tonne from a week ago.
Based on chart the July 2003 cocoa futures prices closed the week bearish and continued to show the bearish trend would continue this week. Chart support for this week is adjusted sharply lower to the US$1,780–US$1,750 levels. Breaking of these immediate supports would signal the bearish wave is continuing. Chart resistance is revised lower to US$1,830–US$1,850.
The daily technical indicators closed the week bearish and indicated the market’s immediate trend is negative.
The daily stochastics ended the week deep in the bearish extended-move zones and signalled the negative trend is not over. The daily oscillator per cent K settled below the oscillator per cent D and closed sharply lower at 7.66% and 8.38% respectively.
The 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines) triggered the sell signal last week and indicated the immediate cycle is bearish. The 3- and 7-day ESA-lines finished the week lower at 1,832 and 1,877 respectively.
The daily moving-average convergence/divergence (MACD) flashed the sell signal on May 5 and ended Thursday bearish. The daily MACD and trigger-line settled the week higher in the negative zones at minus 25.21 and minus 15.70 points respectively.
The daily Momentum Index (MI) slipped below the 100-point mark on May 6 and ended Thursday lower at 92.47. Analysis of the daily MI shows the immediate momentum of the market is bearish.
Tin prices on the Kuala Lumpur Tin Market expanded on their bullish momentum last week boosted by light commercial demand and firmer prices on the London Metal Exchange.
Cash tin prices closed the week moderately higher at US$4,715 per tonne, up US$85 per tonne from previously. Trading range for the week widened from US$4,680 to US$4,715 per tonne.
Volume for the week eased slightly to 182 from 188 tonnes a week ago.
Based on chart cash tin prices settled the week bullish and Friday’s close at their highest levels in 10 weeks indicate the bullish momentum could carryover into this week’s trading. Chart support for this week is seen higher at the US$4,690–US$4,670 per tonne level. Chart resistance is adjusted higher to US$5,750–US$5,770.
The weekly technical indicators ended positive and indicated more upside trading this week.
The weekly stochastics remained bullish at Friday’s close and signalled the upward trend could continue. The weekly oscillators per cent K and D ended higher at 73.95% and 56.42%.
The weekly moving-average convergence/divergence (MACD) closed with a strong positive convergence and indicated the main trend is still positive. The MACD and the trigger-line ended the week higher in the positive territory at 0.094 and 0.095 of a point respectively.
The 3- and 7-week exponentially smoothed moving-average price lines (ESA-lines) continue to indicate the market’s immediate cycle is bullish. The 3- and 7-week ESA-lines closed higher at 4,660 and 4,620 respectively.
The weekly Momentum Index (MI) stayed above the 100-point mark and closed the week higher at 103.62. Analysis of the weekly MI shows the market’s immediate trend is bullish.